BNUMBER:  B-281383 
DATE:  February 1, 1999
TITLE: Todd Pacific Shipyards Corporation, B-281383, February 1,
1999
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Matter of:Todd Pacific Shipyards Corporation

File:     B-281383

Date:February 1, 1999

Dennis H. Walters, Esq., Karr, Tuttle, and Campbell, for the 
protester.
Kimberly A. Kegowicz, Esq., Department of Transportation, for the 
agency.
Katherine I. Riback, Esq., and James Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Solicitation for ship repair is improper where the record evidences 
that the stated foreseeable costs to be added to each bidder's bid 
price to determine the low bidder are grossly understated.  

DECISION

Todd Pacific Shipyards Corporation protests invitation for bids (IFB) 
No. DTCG85-98-B-625M51, issued by the Department of Transportation, 
U.S. Coast Guard (USCG), for furnishing the necessary labor, 
materials, and facilities to dry-dock and repair the USCG Cutter Polar 
Star (an icebreaker).  

We sustain the protest.

The IFB, issued on September 21, 1998, provides for award on the basis 
of price and price-related factors.  The IFB lists a variety of costs 
that the government expects to incur in moving the ship to and from 
the contractor's shipyard; these anticipated costs, which according to 
the distance between the bidder's shipyard and the ship's location, 
are to be added for evaluation purposes to the bid prices to determine 
the lowest bidder.  IFB  sec.  M.3.  Among the foreseeable costs called out 
in the solicitation is "[t]he cutter's fuel, maintenance and personnel 
cost for one (1) round trip from the cutter's home moorage at . . . 
Seattle, [Washington] to contractor's place of performance at $172.30 
per nautical mile."  IFB  sec.  M.3.A.    

Todd protested to our Office before the November 17 bid opening, 
arguing that the $172.30 per nautical mile is outdated, and that the 
actual fuel, maintenance and personnel costs that will be necessary to 
move the Polar Star to and from the contractor's place of performance 
are much higher, such that the IFB contains no reasonable method for 
determining which bid provides the lowest overall cost to the 
government.[1]  

The agency states that the current rate of $172.30 per nautical mile 
for transiting cutters of the Polar Star's class to and from 
prospective shipyards was established in 1991 based on 1989 and 1990 
data.  Jan. 14, 1997 Notes from Vessels Conference at 1.  The agency 
states that they are currently in the process of updating these rates, 
but that revising the rates is a "complex and far reaching process."  
Agency Memorandum of Law at 4.  Regarding the present solicitation, 
the agency contends that the IFB clearly and concisely stated the 
foreseeable cost formula to be used in the evaluation of the low 
bidder, and that all bidders were able to prepare their bids on an 
equal and well informed basis.  Agency Memorandum of Law at 2.   

Under Federal Acquisition Regulation  sec.  14.201-8, the evaluation of 
price-related factors, including foreseeable costs "to the Government 
resulting from such factors as differences in inspection, locations of 
supplies, and transportation," is a proper basis for award in a sealed 
bidding procurement.  Cascade Gen., Inc., B-272271, Aug. 1, 1996, 96-2 
CPD  para.  52 at 2.  "While a nonlocal facility is assessed a higher 
transportation charge, the charge simply reflects an actual cost to 
the government, which is entitled to consider this cost in evaluating 
bids."  Marlen C. Robb & Son, Boatyard & Marina, Inc., B-256516, June 
28, 1994, 94-1 CPD  para.  392 at 3.  However, when a solicitation lacks 
accurate foreseeable costs, the agency cannot determine whether award 
to one firm versus another will result in a lower cost to the 
government.  See Hoechst Marion Roussel, Inc., B-279073, May 4, 1998, 
98-1 CPD  para.  127 at 3 (protest sustained where solicitation for drugs 
did not state accurate dosage estimates); Beldon Roofing & Remodeling 
Co., B-277651, Nov. 7, 1997, 97-2 CPD  para.  131 at 7 (protest sustained 
where solicitation for roofing work lacked accurate quantity 
estimates).  

We agree with the protester that the 1989 and 1990 rates that the 
agency used in the solicitation are outdated; however, this fact alone 
is not determinative.  See Southgate Servs., B-246758, Mar. 20, 1992, 
92-1 CPD  para.  300 at 5-7 (protest denied where solicitation included 
older estimates because more recent estimates were unreliable).  What 
we find determinative, from our review, is that the rate, if 
calculated in the same manner as the 1991 rate but using the most 
recent historical cost data, appears to be grossly understated.  
During the course of this protest, the agency provided under 
protective order historical data on the operating costs of its ships, 
which the agency is reviewing to determine what rates should apply to 
future solicitations.  Since the agency has not yet decided how it 
will use this data to calculate the operating cost factor for its 
ships, we provide no details regarding this historical data.  However, 
this data did indicate a substantial increase in operating costs 
which, if applied, could change the outcome.  Since the agency asserts 
that it was appropriate to use the 1991 rate while it was determining 
how to calculate foreseeable costs for its ships to be used in future 
solicitations and does not assert that this rate relates to current 
actual costs to the government, the record does not evidence that the 
solicitation stated the actual foreseeable costs with any reasonable 
degree of accuracy.  

While the agency argues that the calculation of final rates is a 
lengthy process that must take into account, among other factors, 
differing situations on the East and West Coasts, the agency has not 
explained why it could not simply adjust the rates in this IFB to make 
them as accurate as reasonably possible, even if such a correction is 
not applied nationwide.  Under the circumstances, we cannot say that 
the solicitation provides a rational basis for the government to 
determine whether award to one firm versus another will result in a 
lower cost to the government.  Accordingly, we sustain the protest.  

We are advised that because the agency authorized an award to Cascade, 
notwithstanding the protest, the Polar Star has arrived in Portland 
and contract performance has commenced.  Thus, we do not believe that 
it is practicable to disturb the award.[2]  However, we do recommend 
that the protester be reimbursed the reasonable costs of filing and 
pursuing its protest, including attorney's fees.  4 C.F.R.  sec.  
21.8(d)(1) (1998).  In accordance with 4 C.F.R.  sec.  21.8(f)(1), Todd's 
certified claim for such costs, detailing the time expended and the 
costs incurred, must be submitted directly to the agency within 60 
days after receipt of this decision.

The protest is sustained.

Comptroller General 
of the United States   

1. The agency received bids under the IFB from Cascade General, Inc. 
of Portland, Oregon and from Todd Pacific Shipyards of Seattle.  
Cascade's bid was $3,488,114 and Todd's was $3,732,863, prior to the 
application of the foreseeable cost factors.  Cascade's bid was 
$3,682,317.20, after adding $194,203.20 in foreseeable costs, 
including $124,745.20 in operating mileage costs.  Todd's bid was 
$3,755,763.20, after adding $22,900.20 in foreseeable costs, including 
$689.20 in operating mileage costs.  On December 4, the agency 
determined that there were urgent and compelling circumstances which 
significantly affect the interests of the United States that required 
award and contract performance, notwithstanding the protest.

2. When an agency overrides a Competition in Contracting Act (CICA) 
stay based upon a written finding of urgent and compelling 
circumstances, CICA permits our Office to consider all 
circumstances--including cost and disruption to the government--in 
fashioning the appropriate remedy under a sustained protest.    
See 31 U.S.C.  sec.  3554(b)(1) (1994); 4 C.F.R.  sec.  21.8(b) (1998); Arthur 
Young & Co., B-216643, May 24, 1985, 85-1 CPD  para.  598 at 7-8.